The Oracle of Omaha, Warren Buffett, turned an initial bankroll of $10,000 into a multibillion-dollar conglomerate. Shelby Davis began with $50,000, and he amassed a $900 million fortune. These inspiring stories give us all hope that we'll be able to achieve our own financial dreams. But what if you don't have $50,000, or $10,000, or even $5,000 to get started?

Fear not, Fool -- you aren't doomed to penury and misery. You don't need to be a trust-fund baby to start securing your financial future. Just follow these four simple steps:

  • Start today.
  • Invest regularly. Every month, put away $250, $100, even $50.
  • Look to the stock market for your best hope of realizing your dreams.
  • Seek undervalued small-cap stocks for your greatest returns.           

Why small caps?
Because they offer the greatest potential for market-beating returns. Institutions tend to ignore these stocks, and analysts don't cover them. By the time anyone realizes they're there, they've already grown and appreciated in price.

To find these future giants, we'll screen for stocks with:

  • Market values less than $3 billion, to qualify as a small cap (but no micro caps).
  • An earnings surprise of 20% or more in the latest quarter.
  • Long-term earnings growth potential of at least 15%.            

We'll filter our findings through the collective investing wisdom of the more than 150,000 professional and novice investors in our Motley Fool CAPS community. If the best and brightest CAPS players think these stocks hold potential, then we ought to take notice, too.

Here are some of the stocks this simple screen found:

Company

Market Cap

Share
Price

EPS Surprise

Median Analyst 5-Year EPS Estimate

CAPS Rating (out of 5)

Alvarion (NASDAQ:ALVR)

$217.2 million

$3.50

NC

23%

*****

Conexant Systems (NASDAQ:CNXT)

$234.1 million

$3.90

55%

20%

***

Nanometrics (NASDAQ:NANO)

$156.7 million

$8.41

NC

15%

*

Natus Medical (NASDAQ:BABY)

$376.2 million

$13.25

18%

28%

*****

PowerSecure International (NASDAQ:POWR)

$114.2 million

$6.63

50%

19%

****

Source: Yahoo.com. NC=not calculable. Alvarion's earnings were $0.01 vs. estimated $0.00; Nanometrics reported a profit of $0.08 vs. estimated $0.06 loss.

Of course, this is not a list of stocks to buy. This is a starting point for more research. We need to look more closely at these companies to see if analysts' faith in them is well-founded, but we've got the CAPS community helping us here, so let's start with a favorite.

An alternative opportunity
Nanometrics, which supplies advanced process-control metrology systems, surprised everyone when it turned in better than expected earnings for its latest quarter. But management said investors shouldn't expect it to duplicate that effort because growth rates likely would be lower.

That was underscored a little more than a month later when the company priced a 2 million-share offering at a 12% discount to what the stock had closed at the day before. And it hardly gave investors any confidence when the company's founder dumped 675,000 shares at the same time for a similar price.

Shares trade 40% below the 52-week high hit back in December and are almost 25% off even the discounted $11 price of the share offering. Even CAPS members are pretty unsure of Nanometrics' prospects, with just 58% of those rating the company thinking it will outperform the market. It might be more telling that a similar percentage of All-Star CAPS members think it will underperform.

Yet one All-Star sees Nanometrics surprising the markets again. IBDvalueinvestin says that if analysts' forecasts are correct, investors could be in for a nice turnaround because the target price was increased to $17 a share.

Nanometrics competes against both KLA-Tencor  (NASDAQ:KLAC) and Rudolph Technologies  (NASDAQ:RTEC), which were able to beat analyst forecasts for the latest quarter, leading to their shares surging higher. With Nanometrics scheduled to report earnings next week, why not join the All-Stars on the Nanometrics CAPS page and let us know whether you think it can confound the experts once again?

Foolish final thoughts
Academics will tell you that individual investors have little chance of beating the stock market. They say the Warren Buffetts, Shelby Davises, and Peter Lynches are the exceptions to the rule. We at The Motley Fool don't agree. Stock investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think.

It is possible to make a more comfortable retirement for yourself, even if you have little money to start with or are starting late in life. It is possible to turn $100 into $1 million. You just have to commit: Do it now, and do it regularly. No amount is too small. Let's get started. There's no time to lose!